This application addresses the thematic area, "Using Science to Enable Health Care Reform." The future of the Medicare program poses one of the greatest policy challenges to the United States. This extraordinarily popular program has brought universal health insurance coverage to the elderly and others who would otherwise lack access to needed health services. The implementation of Medicare Part D to cover prescription drugs is widely viewed as a success;yet in several ways Medicare is an anachronism. First, its fee-for-service reimbursement system has all but vanished from private health insurance. Medicare imposes copayments and deductibles like commercial health insurance plans, but about 80% of beneficiaries have supplemental insurance, which reduces the out-of-pocket payments. Thus most beneficiaries do not fully consider costs-or even Medicare copayments-when making health care decisions. Second, research has demonstrated dramatic variation in per capita Medicare expenditures across regions of the U.S.-variation that cannot be explained by demographic or health characteristics. Yet high resource use regions do not have superior health outcomes. The services covered by Medicare may thus be a poor match to the needs of older Americans in many regions. Third, the program is the largest fiscal liability of the Federal government. The aging of the baby boomers will swell the population of Medicare beneficiaries. Absent program changes, Medicare expenditures will rise from 3% of gross domestic product today to 17% by 2082. This research collaboration will design and conduct Medicare-related research, policy simulation, and welfare analysis to address these issues. A multidisciplinary team spanning four institutions at the forefront of health economics and policy research- Stanford University, University of Southern California, RAND Corporation, and the University of California, Berkeley-will focus on solutions to ensure Medicare continues its legacy of success. The American Recovery and Reinvestment Act of 2009 provided an unprecedented $1.1 billion to explore comparative effectiveness research (CER). Yet specific applications of CER to the Medicare program do not yet exist. With these in mind, our Specific Aims are: 1) Develop intertemporal optimization models of plan choice in the Medicare Part D market;2) Understand competition in the Medicare Part D marketplace;3) Examine the consequences of FBD for utilization, health, and spending;4) Apply comparative effectiveness analysis to identify clinical areas for potential savings in Medicare;and 5) Build a research network to support Medicare-related research and policy. We will promote collaboration and dissemination through various activities, including a national Medicare: Science and Policy Conference that will disseminate research findings and promote science-based Medicare reform. PUBLIC HEALTH RELEVANCE: This application focuses on solutions to ensure that Medicare continues its legacy of success. Our multidisciplinary team spanning four institutions at the forefront of health economics and policy research will design and conduct Medicare-related research, policy simulation, and welfare analysis that will focus on solutions to ensure Medicare continues its legacy of success.